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Nokia Shrs Soar As Q4 Lumia Sales Top Previous Guidance

Nokia shares are trading sharply higher Thursday morning after the mobile phone company said Q4 results were better than expected, thanks to strong sales of the company’s Windows Phone 8-based Lumia smartphones. The company also is seeing better-than-expected results at Nokia Siemens Networks.

The company said its Devices & Services business “exceeded expectations and achieved underlying profitability” in the quarter. Nokia said that the mobile phone business unit and its Lumia portfolio “delivered better than expected results.” The company also said operating expenses were lower than expected. Devices & Services non-IFRS operating margin is now projected at between break even and positive 2%. That compares to a previous estimate of negative 6 percent, plus or minus four percentage points.

Nokia added that “seasonality and [a] competitive environment are expected to have a negative impact on the first quarter 2013 underlying profitability for Devices & Services, compared to the fourth quarter 2012.” For Q1, the company sees non-IFRS operating margin of about -2%.

Meanwhile, the company said that Nokia Siemens Networks exceeded expectations for the fourth quarter, “delivering record underlying profits and a third consecutive quarter of underlying profitability.” The business saw “strong performance in higher margin product categories and geographic regions.” the company said, along with “better than expected cost management.” The company said Nokia Siemens Networks non-IFRS operating margin for the fourth quarter 2012 is now expected to be between 13 and 15 percent.

For the first quarter, Nokia said, “seasonality is expected to have a negative impact on … underlying profitability for Nokia Siemens Networks, compared to the fourth quarter 2012.” Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS operating margin in the first quarter 2013 to be approximately positive 3 percent, plus or minus four percentage points.

“We are pleased that Q4 2012 was a solid quarter where we exceeded expectations and delivered underlying profitability in Devices & Services and record underlying profitability in Nokia Siemens Networks,” CEO Stephen Elop said in a statement. “We focused on our priorities and as a result we sold a total of 14 million Asha smartphones and Lumia smartphones while managing our costs efficiently, and Nokia Siemens Networks delivered yet another very good quarter.”

Nokia estimates that Devices & Services sales in the quarter were about 3.9 billion Euros, with total device volumes of 86.3 million units. Mobile phone net sales were an estimated 2.5 billion Euros, with sales of 79.6 million units, including 9.3 million Asha full touch smartphones. Smart Devices sales were an estimated 1.2 billion Euros, including 6.6 million units, of which 4.4 million were Lumia phones.

Total smartphones were 15.9 million units, including 9.3 million Asha units, 4.4 million Lumia phones and 2.2 million Symbian smartphones.

Nokia estimates that Devices & Services non-IFRS operating margin for the fourth quarter 2012 was between break even and positive 2 percent, which compares to the previous outlook of approximately negative 6 percent, plus or minus four percentage points. Devices & Services non-IFRS operating margin includes a positive impact from non-recurring IPR income of approximately EUR 50 million.

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